Docket No. 2007-54509L 6 of 6
PETITIONER:Employer Account No. - 2782628
CLASSIC COLORS OF CENTRAL FL INC
5323 E SOUTH CROSSING CT
INVERNESS FL 34452
PROTEST OF LIABILITY
DOCKET NO. 2007-54509LRESPONDENT:
State of Florida
Agency for Workforce Innovation
c/o Department of Revenue
O R D E R
This matter comes before me for final Agency Order.
Having fully considered the Special Deputy’s Recommended Order and the record of the case and in the absence of any exceptions to the Recommended Order, I adopt the Findings of Fact and Conclusions of Law as set forth therein. A copy of the Recommended Order is attached and incorporated in this Final Order.
In consideration thereof, it is ORDERED that the determination dated August 30, 2007, is AFFIRMED.
DONE and ORDERED at Tallahassee, Florida, this ______day of December, 2007.
Cynthia R. LorenzoDeputy Director
Agency for Workforce Innovation
AGENCY FOR WORKFORCE INNOVATION
Office of Appeals
MSC 347 Caldwell Building
107 East Madison Street
Tallahassee, FL 32399-4143
PETITIONER:Employer Account No. – 2782628
CLASSIC COLORS OF CENTRAL FL INC
5323 E SOUTH CROSSING CT
INVERNESS FL 34452
PROTEST OF LIABILITY
DOCKET NO. 2007-54509LRESPONDENT:
State of Florida
Agency for Workforce Innovation
c/o Department of Revenue
RECOMMENDED ORDER OF SPECIAL DEPUTY
TO: Cynthia R. Lorenzo, Deputy Director
Agency for Workforce Innovation
This matter comes before the undersigned Special Deputy pursuant to the Petitioner’s protest of the Respondent’s determination dated August 30, 2007.
After due notice to the parties, a telephone hearing was held on November 13, 2007. The Petitioner, represented by its corporate president, appeared and testified. The Petitioner’s vice president, a painting contractor, and a bookkeeper employed by an accounting service, testified as the Petitioner’s witnesses. The Respondent was represented by a Department of Revenue Tax Auditor II. A Revenue Specialist III testified as a witness. The Joined Party appeared and testified. The Joined Party’s wife testified as a witness.
The record of the case, including the recording of the hearing and any exhibits submitted in evidence, is herewith transmitted. Proposed Findings of Fact and Conclusions of Law were not received.
Issue: Whether services performed for the Petitioner by the Joined Party and other individuals as painters constitute insured employment pursuant to Sections 443.036(19), 443.036(21); 443.1216, Florida Statutes, and if so, the effective date of the liability.
Findings of Fact:
1. The Petitioner is a corporation which was incorporated in May 2006 to operate a business as a painting subcontractor. The Petitioner is primarily involved in residential painting. The Petitioner has made a subchapter S election and the president and vice president are both active in the business operation.
2. Prior to November 2006, on the advice of the Petitioner’s accountant, the Petitioner hired individuals referred to by the Petitioner as “1099 employees” to allow flexibility due to fluctuations in the availability of work. The “1099 employees” are paid by the hour. At the time of hire, the “1099 employees” are informed that they are on probation for a period of 90 days. The Petitioner provides everything that is needed to perform the work including paint, ladders, drop cloths, and brushes. The Petitioner provides transportation to the worksites for the painters. Prior to November 2006, the Petitioner usually had only one or two painters working at a time, however, the Petitioner hired and fired numerous painters due to dissatisfaction with the quality of the painters’ work.
3. The president and vice president received draws from the business, but were not reported as employees of the Petitioner.
4. In September 2006, the Joined Party contacted the Petitioner seeking employment. The Joined Party and the vice president previously worked together for another painting contractor. The vice president had been the Joined Party’s supervisor and was aware of the quality of the Joined Party’s work. The vice president informed the Joined Party that the Joined Party would be paid $14 per hour and would be a 1099 employee. It was explained that as a 1099 employee, the Joined Party would be responsible for paying his own taxes. The Joined Party accepted the offer and began work on September 23, 2006.
5. In November 2006, the Petitioner obtained a contract to perform painting for the developer of a residential community. Due to requirements of the developer, the Petitioner contracted with Southeast Employee Leasing, an employee leasing company, to provide its painters. The Petitioner retained the right to hire and fire painters. The Petitioner paid the leasing company a lump sum for each worker, to cover hourly wages, taxes, and workers’ compensation insurance. Since November 2006, the number of painters employed through the employee leasing company has fluctuated between four and seven. The Petitioner continued to use the other painters referred to as 1099 employees. The Joined Party was not transferred to the payroll of the employee leasing company and continued to work for the Petitioner as a 1099 employee until June 22, 2007.
6. The Petitioner’s vice president was transferred by the Petitioner to the payroll of the employee leasing company. However, the Petitioner’s president continues to receive draws from the Petitioner which have not been reported as wages.
7. None of the workers, whether leased through the employee leasing company or not, receive any fringe benefits. None are full time. All of the painters are paid an hourly wage determined by the Petitioner and all are informed at the time of hire that they are on probation for a period of ninety days.
8. All paint, tools, equipment, and supplies are provided for all of the painters. The Petitioner provides cell phones to the painters. The Joined Party was authorized by the Petitioner to charge any items that were needed to do the work, to the Petitioner’s charge account. The Joined Party usually preferred to use his own brushes. On one occasion the Joined Party was using the Petitioner’s power paint sprayer when it malfunctioned. The Joined Party owned a paint sprayer and he used his own sprayer until the Petitioner provided a working sprayer for the job.
9. All of the painters work under the Petitioner’s occupational license and are covered by the Petitioner’s liability insurance policy.
10. All leased employee painters and 1099 employee painters are generally required to report to a storage facility leased by the Petitioner each morning by 7:30 AM to obtain the daily work assignments. The Petitioner owns four vans which are used to transport the painters to the worksites. The Joined Party usually drove one of the vans to transport the other painters. The Petitioner was responsible for the cost of operating the vans. All of the painters, whether leased employees or 1099 employees, are covered under the Petitioner’s automobile insurance policy.
11. On May 18, 2007, due to problems caused by a 1099 employee who had worked outside the Petitioner’s regular business hours, the Petitioner required all painters, whether leased employees or not, to sign a policy document. The Petitioner’s policy document provides that each painter is entitled to a thirty minute lunch break and also a fifteen minute break in the afternoon. The policy provides that all painters are required to wear a clean classic white painter’s uniform, that the painters are prohibited from using drugs, and that the painters are responsible for maintenance of the Petitioner’s equipment. The policy document also placed all painters, including the Joined Party, on probation for a period of ninety days.
12. The Petitioner’s vice president personally supervises the painters to make sure each painter does a really good job in a timely fashion. The vice president treats each worker in the same manner regardless of whether the worker is a leased employee or a 1099 employee. All painters must perform the work the way the Petitioner wants the work to be performed. The vice president has warned the painters about work performance and about attendance.
13. The Painters are not required to record their hours of work. The Petitioner is on the jobsite with the painters and logs the time worked by each worker. The painters are paid from the time they report to the storage facility until they return to the storage facility at the end of the day. The Petitioner determines when the painters stop working each day.
14. The Petitioner pays the painters on a regularly scheduled payday, Friday. However, the Petitioner holds back one week’s pay. The employee leasing company is responsible for paying the leased employees from funds provided by the Petitioner for that purpose. The Petitioner is responsible for paying the 1099 employees. The Petitioner does not withhold taxes from the pay of the 1099 employees. At the end of the year, the petitioner reports the earnings of the 1099 employees on Form1099-MISC as non-employee compensation.
15. The Petitioner has the right to discharge any painter, whether the painter is a leased employee or not, at any time without incurring liability. The Painters also have the right to terminate the relationship at any time.
Conclusions of Law:
16. The issue in this case, whether services performed for the Petitioner by the Joined Party and other individuals as painters constitute employment subject to the Florida Unemployment Compensation Law, is governed by Chapter 443, Florida Statutes. Section 443.1216(1)(a)2., Florida Statutes, provides that employment subject to the chapter includes service performed by individuals under the usual common law rules applicable in determining an employer-employee relationship.
17. The Supreme Court of the United States held that the term "usual common law rules" is to be used in a generic sense to mean the "standards developed by the courts through the years of adjudication." United States v. W.M. Webb, Inc., 397 U.S. 179 (1970).
18. The Supreme Court of Florida adopted and approved the tests in 1 Restatement of Law, Agency 2d Section 220 (1958), for use to determine if an employment relationship exists. See Cantor v. Cochran, 184 So.2d 173 (Fla. 1966); Miami Herald Publishing Co. v. Kendall, 88 So.2d 276 (Fla. 1956); Mangarian v. Southern Fruit Distributors, 1 So.2d 858 (Fla. 1941); see also Kane Furniture Corp. v. R. Miranda, 506 So2d 1061 (Fla. 2d DCA 1987).
19. Restatement of Law is a publication, prepared under the auspices of the American Law Institute, which explains the meaning of the law with regard to various court rulings. The Restatement sets forth a nonexclusive list of factors that are to be considered when judging whether a relationship is an employment relationship or an independent contractor relationship.
20. 1 Restatement of Law, Agency 2d Section 220 (1958) provides:
(1) A servant is a person employed to perform services for another and who, in the performance of the services, is subject to the other's control or right of control.
(2) The following matters of fact, among others, are to be considered:
(a) the extent of control which, by the agreement, the business may exercise over the details of the work;
(b) whether or not the one employed is engaged in a distinct occupation or business;
(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work;
(f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether or not the work is a part of the regular business of the employer;
(i) whether or not the parties believe they are creating the relation of master and servant;
(j) whether the principal is or is not in business.
21. Comments in the Restatement explain that the word “servant” does not exclusively connote manual labor, and the word “employee” has largely replaced “servant” in statutes dealing with various aspects of the working relationship between two parties.
22. In Department of Health and Rehabilitative Services v. Department of Labor & Employment Security, 472 So.2d 1284 (Fla. 1st DCA 1985) the court confirmed that the factors listed in the Restatement are the proper factors to be considered in determining whether an employer-employee relationship exists. However, in citing La Grande v. B&L Services, Inc., 432 So.2d 1364, 1366 (Fla. 1st DCA 1983), the court acknowledged that the question of whether a person is properly classified an employee or an independent contractor often can not be answered by reference to “hard and fast” rules, but rather must be addressed on a case-by-case basis. Thus, an analysis using the factors listed in the Restatement follows.
23. (a) the extent of control which, by the agreement, the business may exercise over the details of the work. The initial agreement of hire between the Petitioner and the Joined Party was a verbal agreement. The initial agreement only reveals that the Petitioner had control over the method and rate of pay. On May 18, 2007, the Joined Party was required to sign a written policy document. Although the actual document was not presented as evidence, the Petitioner’s testimony reveals that the document provides the Petitioner with the right to control the details of the work. Although the Joined Party had already worked for the Petitioner for approximately eight months, the Joined Party and all of the other painters were placed on probation for ninety days as of May 18. The document even controls the painters through a dress code and establishes when the painters are permitted to eat lunch and take breaks.
24. (b) whether or not the one employed is engaged in a distinct occupation or business. Painter is a distinct occupation.
25. (c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision. No evidence was adduced concerning whether painters in the locality usually work under the direction of an employer or whether the work is performed by specialists without supervision. However, the evidence reveals that the Joined Party and the Petitioner’s vice president were previously employed by another painting contractor and that the vice president had been the Joined Party’s supervisor. The evidence also reveals that the work performed for the Petitioner by the Joined Party and the other painters was performed under the direct supervision of the vice president.